Incoming Managing Executive for Alternative Business Model and Group Innovation for Barclays Africa Group, Aupa Monyatsi, last week surprised corporate executives attending the Economic Outlook Forum 2018 held in Gaborone, with startling revelations about the future of banking. Now based in Johannesburg, the former acting Managing Director of Barclays Botswana -Monyatsi was one of the panellists discussing how financial technology, now commonly known as Fintechs are reshaping banking. Monyatsi said collaboration between banks and Fintechs can deliver scaled and innovative solutions; more accessible products; improved products efficiency; deeper and analytics driven customer engagement and enhance risk mitigation. On the other hand, an application programme interface (API) provides enabling technology for a platform to make the interface between Fintechs and banks. An API is a set of routines, protocols, and tools for building software applications. Basically, an API specifies how software components should interact. Banks are looking at developing portals for APIs, who are the future of how banks do business and conduct transactions.
What are Fintechs?
FinTech is the new applications, processes, products, or business models in the financial services industry, composed of one or more complementary financial services and provided as an end-to-end process via the Internet. Fintech is a portmanteau of financial technology that describes an emerging financial services sector in the 21st century. Originally, the term applied to technology applied to the back-end of established consumer and trade financial institutions. "Banks that partner with Fintechs, which are simply technology companies and start-ups, will prosper. Those that ignore the opportunity or bury their heads in the sand will perish. Innovative companies like Apple, Alibaba have entered this market early by embracing technology," cautions Monyatsi. Monyatsi, with his flawless and in-your-face presentation, stunned the corporates when he declared that the future will need a different type of banker. He said research has shown that 73% of employees in banks are on processing jobs and the future banker will not necessarily be a graduate of banking related courses because information they can currently impart or service they provide can be simply loaded onto algorithms in Artificial Intelligence (AI), Fintechs. Such advancement will make the jobs redundant, the so-called automation. "The future banker will need to be one who performs duties that the computer/ technology cannot deliver, perhaps a more empathetic, hospitality specialist with background in social studies and more emotionally attuned to deal with clients," said Monyatsi.To buttress the point, Monyatsi said Barclays’ division Absa is already pursuing Artificial Intelligence (AI) technology by developing algorithms to innovate systems that provide intimate customer service. For instance, Absa is already piloting instant account opening (without laborious process of physically applying at a branch), and in future will spread to other services like acquisition of property or assets. Other on-going trials seek to deliver real time response to enquiries on any platform e.g. emails or social media because the algorithms can handle huge volumes of information about customers. Further, Monyatsi said Absa is piloting Legal RoboAdvisors and has launched algorithms with information about legal issues as part of the trials. He said at Barclays Africa Group they running a series of incubators and accelerators for Fintech start-ups. "We already appreciate how much they add value to customers and to the bank,” he said.
Coupled with advances in the use of smartphones Monyatsi and other panellists concur that technology will change the process of banking for good. Customers may never have to leave their homes to visit banks for basic transactions, they said. According to Brighton Banda – Retail Director, Barclays Botswana – this is possible because already most of the population uses cell phones and USSD for mobile banking to make balance enquiries, cash send, money transfer, e-wallet etc. The latest BOCRA Report shows that in recent years Botswana has been characterised by impressive ICT development, paired with the advent of mobile telephony. Mobile telephony has reached over three (3) million subscriptions which equates to 59% teledensity. Mobile broadband has exceeded 1.4 million subscriptions. Banda said Fintechs have jolted financial institutions (banks) out of their comfort zone of emphasising focus on regulatory requirements, hence the view that they are disruptors. They have changed the normal way of doing business. Elaborating on how Fintechs force banks to look at operating models, to work faster and cheaper, which in turn benefits customers, Banda said: "Pressure from customers demanding innovative solutions saving them time and money have forced banks to partner with Fintechs, which provide insights into how a customer transacts on their account. Fintechs create an opportunity to launch or introduce new products for customers without disrupting existing services". Fintechs create solutions to the economic landscape, as they leverage technology that is already in the hands of customers or public thus leading to financial inclusion of sections of the population that were previously unbanked.
Job losses, risks
Notwithstanding the positives, the panellists warned that financial institutions have to guard against risks associated with the advent of new technology. Both Monyatsi and Banda caution that Fintechs will raise privacy issues because they allow banks to monitor the spending pattern of their customers, which the latter may be uncomfortable with. By forcing banks to share customer data through APIs, Fintechs – who are third parties – also raise issues of privacy, integrity critical and the risk of identity theft. Adoption of Fintechs is also giving human capital specialists headaches as fears of jobs losses have become more pronounced and more realistic than ever. Monyatsi is very much alive to the looming clash with labour, and threw a jab at his colleague Tumelo Mokowe, Director Human Capital at Barclays Bank Botswana, insisting that Fintechs are good for business. He conceded that Fintechs are likely to create clashes with HR as technology will necessitate a lot of automation. But an apt response to Monyatsi would come later from Keabetswe Pheko-Moshagane – Chief Operations Officer Barclays Bank Botswana – who in her closing remarks observed that at the turn of the millennium there were widespread fears that the year 2000 would mark the end of computers. It was not to be, she said. Human beings have demonstrated great resilience and adaptability to change and the same will happen with Fintechs, she opined.
Country Manager for Cellulant Botswana – a Pan-African mobile commerce company with operations in 11 countries – Hilda Gathuya waxes lyrical about Fintechs. Cellulant is a leading digital payments' service provider that prompts, collects, settles and reconciles payments in real time. Gathuya said although they are viewed as disruptive emerging technologies, particularly in technophobia Africa, there is a noticeable sharp uptake of technological products and services by customers. "We provide an array of tailor made products for our clients making consumers life easier. There are many integrations currently on-going," she said, citing the example of a collaboration between PEP stores and Absa, which is working wonders for the Barclays Group. Projecting the future she envisages major collaborations, which could accommodate group saving schemes like motshelo etc particularly in Botswana where the population is more banked than any other country in Africa. "We need to have a deeper understanding of the behaviour of consumers to develop suitable solutions using technology," she said. In the meantime innovators (technology geeks), financial institutions and consumers are watching in awe as Fintechs plunge headlong into developing algorithms that will deliver improved real time products and services to customers hassle free.